Mortgage note investments generally offer returns that are higher than traditional savings accounts, CDs, and bonds.

While individual investments can vary, we often see returns in the 7% to 9% range, with most notes paying out monthly. Returns can vary depending on the specific note, borrower profile, and term, as well as whether the note is a short-term investor loan or a longer term owner occupied mortgage.

A loan servicer is a third party company that handles the day to day administration of the loan. They collect the homeowner’s monthly payments, manage escrow for taxes and insurance, provide payment statements, and ensure everything stays compliant.

Servicers typically charge a monthly fee, often in the range of $40 to $50 per month, which is built into the loan structure.

The homeowner makes their monthly mortgage payment directly to the servicer. This means the homeowner does not have direct contact with us and does not manage payments with us personally. The servicer provides professional handling, transparency, and consistent reporting for everyone involved.

If a borrower pays off their mortgage early, your principal is returned sooner than expected, along with any interest earned up to that point.

Early payoffs are a normal part of note investing. Most of our investors choose to reinvest their funds into future notes, allowing them to continue generating consistent income and keep their capital working.

On individual mortgage notes, investors do not need to be accredited.

Most notes provide monthly payments that include both principal and interest. These consistent distributions make mortgage notes attractive for retirement income and steady cash flow planning.

While no investment is ever foolproof and all investing involves risk, we believe deeply in understanding the downside as clearly as the upside.

We remain involved in every mortgage note we offer. If a homeowner ever stops making payments, we step back in to manage the process. Because the investment is secured by real property in a first-position lien, there is a clear legal path to protect the asset.

Depending on the situation, solutions may include working with the homeowner for a loan modification that works for their current situation.  Other options may include a deed in lieu of foreclosure, or going through the foreclosure process. Our focus is always on resolving the situation responsibly while protecting our investors’ capital.

Our ongoing involvement provides a passive investment and peace of mind for our investors.

Mortgage notes are often purchased at a discount. This means we may acquire a note for less than the remaining loan balance. When that happens, the homeowner continues making their normal mortgage payments, but because the note was purchased below its face value, the effective return to investors can be higher than the borrower’s stated interest rate. 

For example, a note may have a $100,000 unpaid balance and the homewoner is paying 6.5% interest rate.  If we an purchase that note for $85,000 our yield is going to be 7.65%.  

This discount structure is one of the ways note investing can create attractive, asset-backed returns while still being secured by real property.

Many investors choose to hold notes inside self-directed IRAs, including Traditional and Roth IRAs. This allows income and growth to occur inside tax-advantaged accounts while being backed by real property.  We have set these up for our children and parents and are a great option regardless of age.

We work closely with you and your IRA custodian to make the process simple and compliant.

First position means we hold the primary claim to the property.

If a homeowner ever stops making payments, the first-position note holder has the strongest legal right to take back the property.  This position sits above second liens, equity investors, mechanics liens and other claims.  Because each note is secured by real property, there is always a tangible asset behind the investment.

This structure provides downside protection, and a clear legal path forward if anything unexpected occurs. It is one of the reasons mortgage note investing feels so grounded to us. There is always real property supporting the investment.

Seller financed borrowers are rarely “sub-prime.” They are most often well qualified people that don’t fit into conventional underwriting rules. Conventional lending is rigid, tax-driven, and documentation-heavy (Have you tried taking out a loan lately? The paperwork is overwhelming!) Seller financing simply allows strong buyers to bypass structural barriers.

Here are some reasons borrowers choose seller financing:

• Self employed borrowers often take tax write offs. This is great for their bottom line but often makes their income look lower than it actually is. The banks go off tax returns not bank accounts or cash income. This hurts small business owners when it comes to qualifying for a mortgage.
• A recent change in a job or industry. Banks want you to be “seasoned” in your current job. Often they require 2+ years.
• 1099, independent contractor, seasonal worker or commission based workers. Banks want a consistent pay check.
• Privacy. Some borrowers do not want to share their financial information. Perhaps complex family, business or legal reasons.
• Complexity. Banks don’t like borrowers with many LLC’s or income streams.
• Speed. Some transactions need to close quickly and can’t go through the normal loan timeframes.
• TIN vs. SSN. (Taxpayer Identification number vs. Social Security Number)
• Buying a unique property. Banks don’t like properties like mixed use or minor condition issues.
• A recent credit event such as divorce or business restructuring

Did you know the average down payment on a seller financed loan is close to 20%? Conventional loans are closer to 7%.

For more information, read our 1-page guide explaining why qualified buyers choose seller financing over a conventional mortgage.